Feeling the pinch

Prices of basic foods traded on international commodity markets are at record highs and concerns over cost are being voiced around the world.

The price of wheat has doubled in less than a year. In 2007, it traded at a record level of $400 per tonne. Maize has also been selling at record highs, while corn and soy are trading well above their 1990s averages.

The UN Food and Agriculture Organisation said the rising price of cereals had become a "major global concern."

In some areas of the world the price of other basic foods such as milk and meat has more than doubled. Rice and coffee prices are at 10-year highs.

Consumers across the world are feeling the pinch and the Middle East is no exception.

The United Arab Emirates is considering building a strategic reserve of six month's worth of essential food stuffs as a way of curbing price increases.

The UAE has also signed an initial agreement with a supermarket co-operative to maintain 2007 prices of 16 basic food stuffs throughout this year.

Other Gulf countries such as Saudi Arabia, Oman and Kuwait have introduced some food subsidies, as they try to ease inflation.

The Omani Chamber of Commerce and Industry proposed earlier this month that food suppliers should control price rises by establishing caps on basic food items such as wheat flour, rice, sugar, lentils, cooking oil and powdered milk.

While the major losers from higher food prices are the world's poor, big importers, such as the GCC will also lose out.

The Arab Organisation for Agricultural Development said Arab countries imported $10 billion worth of food products annually. Countries like Bahrain, which imports most of its food, will have to spend much more money as food prices continue to rise.

Commentators blame the burgeoning prices of general foodstuffs on a raft of factors.

The overall growth in the world's population, set to top nine billion 2050, is putting pressure on the world's food supply.

The growing wealth of emerging economies such as China and India, whose expanding middle classes are demanding more and more food - specifically meat which is expensive and grain-draining to rear - has also contributed.

High oil prices have increased the cost of transporting food and purchasing fertiliser.

Another major factor has been the rampant production of ethanol in the US, which accounts for a large proportion of the world's unmet cereal demand.

This shift in agricultural production to biofuels is decreasing the amount of land available for food crops, in turn pushing up their price.

Climate change is a major issue threatening food security.

Middle Eastern countries' food supply is at risk from climate change, a recently published UN Food and Agriculture Organisation report claimed.

The report, Climate Change: Implications for Agriculture in the Near East, said shifts in rainfall patterns could affect crops in many countries in the region and that low-lying levels of Bahrain were vulnerable to sea level rise.

UN officials say the lack of food security may lead to social unrest. Demonstrations against rising prices have taken place across the region in recent months, and until governments work out the best way to deal with the increases and absorb food price increases, they are likely to continue.